The Role of Innovation and Globalization Strategies in Post-Crisis Recovery

Abstract

THE ROLE OF INNOVATION AND GLOBALIZATION STRATEGIES IN POST-CRISIS RECOVERY 3The aim of the research is to conduct an empirical investigation and reveal what types of globalization and innovation strategies in turbulent and unfavorable regional institutional environment are most likely to be associated with different trajectories of Russian manufacturing firms' performance in 2007-2012. We employ the results of empirical survey of 1000 medium and large enterprises in manufacturing ( 2009) linked to financial data from Amadeus database and the data on the regional institutional environment. We test that (1) introduction of innovations before the crisis ceteris paribus helped the firms to successfully pass the crisis and recover. We expect that (2) companies that became globalized before the crisis (via importing of intermediate and capital goods; exporting; FDI; establishment of partner linkages with foreign firms) ceteris paribus are more likely to successfully pass the crisis and grow. And (3) propose the positive effect of synergy of innovation efforts and globalization strategy of the firm. We expect that the abovementioned factors are complimentary and reinforce the ability of the firm to recover after crisis shock. We found strong support for the hypothesis that firms financing introduction of new products before the crisis and simultaneously managed to promote and sell them on the global market were rewarded by quick return to the growing path after global crisis. Other strategies, i.e. solely innovations without exporting play insignificant role while exporting without attempts to introduce new products contribute even negatively to post-crisis recover. Institutional environment also matters: in the regions with less level of corruption firms were more likely to grow after the crisis.

Exports-performance relationship in Russian manufacturing companies

“…Finally, operating in high-tech industries leads to higher levels of performance, which is a finding that more or less corroborates with evidence presented in other studies based on Russian samples (e.g. Golikova et al , 2012; Golikova and Kuznetsov, 2016). Other firm- and industry-specific issues, such as age, industry concentration and industry-based technological intensity, had no impact on performance in both models.…”

“…As Russian exporting companies do not have enough resources (on average) allowing them to outperform their local counterparts, they need additional resources as they mainly operate in very traditional and low-tech industries. Damijan et al (2013), Du et al (2012), and Lin et al (2014) for Chinese listed companies obtained similar results, whereas Filatotchev et al (2008) and Golikova and Kuznetsov (2016) confirmed the opposite hypothesis. In line with Fedorova et al (2015), we can conclude that there are some additional company characteristics, which a firm should have if it is to benefit from internalization.…”

“…According to the UNCTAD classification, the share of high-skill and technology-intensive manufacturing increased from 30 to 41 percent between 2004 and 2014. Microeconomic data show that manufacturing companies are quite heterogeneous, while 89 percent of exporters are firms with foreign capital (Golikova and Kuznetsov, 2016).…”

“…First, exports by Russian firms increased by around 250 percent between 2004 and 2013, which equates to the second highest growth in exports for G20 countries. According to the study of 500 Russian manufacturing firms, the share of exporting firms is four times higher for foreign-invested companies than domestic-invested firms, and almost twice as high as the average of the sample (Golikova and Kuznetsov, 2016). At the same time, Russia has different characteristics compared to developed countries and other emerging economies, where the effect of internationalization has been studied.…”

Foreign Ownership Shares and Trade Propensity in Indonesian Edible Oil, Vegetable and Animal Fats Industry

“…Foreign-owned firms can overcome the entry barriers to foreign markets. Foreign capital from developed countries has the opportunity to apply more advanced technology in the firms and use it to create new competitive products (Golikova & Kuznetsov, 2016). Technology acquisition from developed countries led to innovation and learning processes in developing countries which were the main source of export excellence at the firm level (Belitz & Mölders, 2016).…”